In 2018, the UK Government will impose a new tax on sugary drinks, aimed at tackling obesity. Behavioral economists believe that taxation alone is unlikely to be very effective in reducing consumption. By 2050, obesity is predicted to affect 60% of adult men, 50% of adult women and 25% of children. It is associated with a range of health problems including type 2 diabetes, cardiovascular disease and cancer. Required: 1. Explain why, in a free market, sugary drinks may be over consumed. 2. Evaluate the view that imposing a tax is the most effective government policy for reducing the market failures arising from overconsumption of unhealthy food and drink.

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In 2018, the UK Government will impose a new tax on sugary drinks, aimed at tackling
obesity.
Behavioral economists believe that taxation alone is unlikely to be very effective in reducing
consumption. By 2050, obesity is predicted to affect 60% of adult men, 50% of adult women
and
25% of children. It is associated with a range of health problems including type 2 diabetes,
cardiovascular disease and cancer.
Required:
1. Explain why, in a free market, sugary drinks may be over consumed.
2. Evaluate the view that imposing a tax is the most effective government policy for
reducing
the market failures arising from overconsumption of unhealthy food and drink.

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